Key Rating DriversDebt Maturing in 2014: The ratings are constrained by refinancingrisk, with over CNY12.8bn of the debt maturing in 2014, includingCNY8.1bn of bonds and CNY1.4bn of trust loans. The impendingmaturity may tie up short-term liquidity and curb growth.

Superior Margins: Lower land costs and development of commercialprojects have yielded stable and superior EBITDA margins of around35% in the past three years. Fitch expects the margins to bemaintained for the next two years due to sufficient land bank andlow land costs.

National Presence: R&F has a well-balanced nationwide land bank,of which 34% (in terms of gross floor area) is located in first-tier cities and 63% is in second-tier cities. There is no over-concentration in any one city and even Guangzhou, where R&F firstestablished its business, only accounted for less than 25% ofcontracted sales in H113. The diversification helps reduceuncertainties inherent in local policies and local economies.

Sustainable Asset Turnover: The company achieved over 1x ofcontracted sales/total debt over the past three years despiteincurring substantial debt, even during challenging marketconditions in H211 and H112. The ratio is expected to improvefurther in the next two years as debt is added at a slower paceand contracted sales growth accelerates.

Diversified Funding Sources: The company benefits from diversifiedfunding channels that ensure sufficient liquidity for financingdevelopment costs, land premium payments and debt obligations.R&F's leverage, as measured by net debt/adjusted inventory, was at49% at end-H113. While this is at the high-end of its 'BB'-ratedpeers, Fitch believes that the ratio is likely to trend down asthe company increases its asset turnover in the next two years.

Positive Outlook: R&F's credit ratings are likely to improve to becommensurate with a 'BB+' profile within the next 12 months if thecompany can refinance debt maturing in 2014 with long-termcapital, and improve its asset turnover and leverage.

"We believe Guangzhou R&F is exposed to higher policy risks thanpeers with a similar rating because of the company's largerexposure to tier-one cities. Local governments' policyimplementation in these cities to curb property price increasestends to be stricter than in lower-tier cities. We expect 50%-60%of Guangzhou R&F's contract sales to come from Guangzhou, Beijing,Tianjin, and Shanghai in the next two years," S&P said.

"Nevertheless, we believe the company's diversified productoffering could partly mitigate the geographic concentration risk,"S&P said."We estimate that about 30% of contract sales in 2013 and 2014will come from commercial properties (mainly office, retail, andservice apartments), which are not subject to purchaserestrictions", S&P said.

"Guangzhou R&F has Chinese renminbi (RMB) 17.9 billion of debt(39.1% of total reported debt) due in 2014. Nevertheless, in ourbase case, we expect Guangzhou R&F to generate satisfactoryproperty sales in the next 12-24 months, and believe that thecompany can manage its debt refinancing because of its establishedaccess to banks and the capital market", S&P said.

"Guangzhou R&F's liquidity is "adequate," as defined in ourcriteria. We expect the company's liquidity sources to exceed itsuses by more than 1.2x over the next 12 months. We anticipatethat management will cautiously manage its liquidity, and canscale back expansion or dividend distribution to preserveliquidity if needed", S&P said.

"Guangzhou R&F has established its market position and brandrecognition in tier-one cities and some tier-two cities, in ourview. We expect the company to continue to focus on these citieswith expansion into more tier-two cities in the next two to threeyears. We anticipate that Guangzhou R&F will maintain above-average profitability as well as a largely stable capitalstructure and cash flow coverage over the next two years", S&Psaid.

"In our opinion, management follows a conservative expansionpolicy compared with that of peers with a similar rating, andtargets good margins", S&P said.

"The stable outlook reflects our expectation that Guangzhou R&Fwill generate satisfactory property sales and maintain above-average profit margins in the next 12 months," said Mr. Lu. Wealso anticipate that the company will be disciplined in debt-funded expansion and that it can manage its liquidity to meet itsshort-term debt maturities in 2014", S&P said.

"We could lower the rating if: (1) Guangzhou R&F's property sales(excluding sales from joint venture projects) are significantlylower than our base-case expectation of RMB38 billion-RMB40billion for 2013 and its EBITDA margins are materially weaker than33%-35%; (2) the company deviates from disciplined growthmanagement and pursues debt-funded expansion more aggressivelythan we anticipate, such that EBITDA interest coverage falls below3.0x or the ratio of total debt to EBITDA exceeds 5.0x without anysign of improvement; or (3) Guangzhou R&F's liquidity and fundingflexibility materially weaken and the company faces increasedrefinancing risk because of its high short-term maturities", S&Psaid.

"We may raise the rating if Guangzhou R&F significantly enhancesits geographical diversification and improves its financial riskprofile. The company's financial risk profile could improvebecause of strong sales, good profitability, and well-managedleverage, such that its ratio of total debt to EBITDA is less than3.0x on a sustained basis", S&P said.

Improving scale in property development: Road King achievedcontracted sales of CNY9.5bn in 2012 and CNY9.4bn in January-September 2013. This is expected to rise to CNY12bn for the wholeof 2013. The improved sales alone are not enough to raise RoadKing's IDR, though. The company has been investing in the propertydevelopment business, and the larger scale brings cost benefitsand diversification in its land bank.

Healthy leverage and liquidity: The company maintains healthyleverage of net debt/adjusted inventory at 31% as of end-H113.Based on its conservative financial management and businessexpansion plan, Fitch expects the company to keep its leveragestable with net debt/adjusted inventory below 35% over the nexttwo years.

Limited growth of toll road business: Road King receives a stablestream of cash from the toll road segment, which is enough tocover over 50% of the company annual cash interest expenses into2015, and support investment in its property development business.While the growth of cash distribution from the toll road businessis expected to be limited in the next 18 months, the recurrentcash inflow is still of a sufficient size to give Road King thefinancial strength and flexibility to support its current ratings.

"The rating on R&F (HK) is equalized with the rating on thecompany's parent Guangzhou R&F Properties Co. Ltd. (BB/Stable/--;cnBBB-/--). We apply a top-down approach to derive the rating onR&F (HK), given that R&F (HK)'s operation is highly integratedwith Guangzhou R&F's. The rating is the same as that of theparent because we view R&F (HK) as a "core" subsidiary ofGuangzhou R&F," S&P said.

"The issue rating is a notch below the long-term credit rating onR&F (HK) because of the uncertainties over regulatory approvalsand the timeliness of financial support from Guangzhou R&F to R&F(HK), which could be affected by China's controls over foreignexchange and capital," said Standard & Poor's credit analyst FrankLu.

"In our view, a keepwell agreement and equity interest purchaseundertaking between Guangzhou R&F and R&F (HK) demonstrate theparent's strong commitment to the subsidiary. A keepwellagreement is a contract between a parent and its subsidiary tomaintain solvency and financial backing through a set term. Butwe don't view these agreements the same as a guarantee," S&P said.

"The stable outlook on R&F (HK) reflects the outlook on GuangzhouR&F and our assessment that R&F (HK) will remain a "core"subsidiary," S&P said.

"The stable outlook on Guangzhou R&F reflects our expectation thatthe group will generate satisfactory property sales and maintainabove-average profit margins in the next 12 months. We alsoanticipate that the company will be disciplined in its debt fundedexpansion, and that it can manage its liquidity to meet short-termdebt maturities in 2014," Mr. Lu said.

"We may upgrade R&F (HK) if we upgrade Guangzhou R&F," S&P said.

"Conversely, we may lower the rating on R&F (HK) if we downgradeGuangzhou R&F," S&P said.

"We may also lower the rating if: (1) we believe that R&F (HK)'simportance to Guangzhou R&F has weakened because of a change inthe parent's strategy; or (2) Guangzhou R&F's control andsupervision of R&F (HK) weakens," S&P said.

"The short-term issuer credit rating on GFNZ has been affirmed at'C'. The outlooks on the ratings are positive," S&P said.

"The rating uplifts reflect a holistic refreshing of GFNZ'sfunding structure, which has enabled the finance company to payback Bank of Scotland and debenture holders ahead of schedule,exiting its debt moratorium," S&P said.

"As a result, our view of GFNZ's funding and liquidity under thenew funding arrangements has substantially improved, as thecompany now is supported by more manageable cash outflows over theshort-to-medium term, and minimum expiry notice periods built intokey facilities. This improved funding position represents a keymilestone for GFNZ, giving it the potential to broaden itsprospects for more meaningful lending growth, as fundingrestrictions that previously existed are now effectively lifted,"S&P said.

"The positive outlooks reflect our expectation that businessstability is likely to improve, with lower funding costs andincreased ability to meaningfully grow its receivables, which inour view is important for the company's ability to turn around itsrelatively high cost-to-income ratio and long-term earningsprospects. We expect the growth to be staggered rather thanspiked, and achieved while maintaining current underwritingstandards," S&P said.

"A rating uplift from the current level would require demonstratedreceivable growth, sustainable profitability, and some improvementin the capital position. We could remove the rating from positiveoutlook if receivable growth outpaces profit generation, weakeningGFNZ's capital base. Notwithstanding the current positiveoutlook, we may lower the rating if credit quality significantlyworsens from the current level or any other factor that results ina loss of confidence from its key funding provider, Westpac. Wecould also lower the rating if the likelihood of default worsensfor other creditors, notwithstanding the performance of theWestpac facility," S&P said.

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* Singapore REITs Have Buffers Against Risks, Fitch Says--------------------------------------------------------Singapore-listed real estate investment trusts (REITs) are highlyleveraged in a low-interest environment, and face a looming riskof rising supply in some sub-markets, says Fitch Ratings.Nonetheless, ratings pressures are buffered - for now - by ourexpectation of stable operating performance, the backing of strongsponsors especially at the larger REITs, and the continuingstrength of the regulatory environment.

A key risk is high FFO-adjusted net leverage, and ongoing exposureto refinancing risk in the (unlikely) event of loans not beingrenewed or if asset values plummet more than expected. Our latestun-weighted average estimates this at 6.64x across all three sub-markets - hospitality, industrials and healthcare.

The high leverage is not a surprise, as several years of low realinterest rates have raised asset values and also pushed upborrowing. Expansionary capex has exacerbated this in thehospitality sub-market. In a rising interest-rate environment,however, the REITS may be able to switch to secured borrowings orsecuritisation - given that the assets of the established REITsare mostly unencumbered.

Another risk is that of a potential drop in rental income amid theimminent rise in property supply. This is particularly salient forthe hospitality industry, which is the most cyclical and leveragedof the REITs under Fitch's coverage. It is also important forindustrial REITs which are likely to see a significant ramp-up inmulti-user factory space by 2015. Declining rental income andlower asset valuations would almost certainly worsen the sector'sfinancial metrics.

Nonetheless, we see credit pressures as evenly balanced; and allfour of Fitch-rated REITs carry a stable outlook - out of the 13listed companies in the healthcare, industrial and hospitalitysectors. This is for three crucial reasons.

First, operating metrics should remain generally stable. Theoutlook for healthcare is underpinned by an ageing population,medical tourism and lease agreements with a triple net clause thatinsulates the REITs from increases in operating expenses, propertyinsurance and tax. Industrial REITs benefit somewhat from lowvacancy rates, stable lease expiry tenors of around three years,competitive rental structures, and a high proportion of single-tenanted properties.

Second, larger REITs in the sector are backed by strong sponsors.Backers include both well-established private- as well as public-sector holding companies with a track record of injecting stableand performing properties, and access to diversified andcompetitive funding sources.

Third, the regulatory environment remains robust, and limits unduerisk-taking across the sector. Loan-to-value ratios are limited bythe Monetary Authority of Singapore (MAS) to 60% for ratedentities, and a more stringent 35% for unrated entities. Moreover,the MAS also requires REITs to invest at least 90% of their assetsin income-producing assets.

The upshot is that high leverage and an anticipated boost insupply will not inevitably result in unsustainable credit pressureacross Singaporean REITs. This is because stable operatingmetrics, strong sponsor backing and a robust regulatoryenvironment are important countervailing sources of creditsupport.

Fitch's ratings coverage currently does not extend to Singaporeanlogistics and retail REITs.

====================S O U T H K O R E A====================

KOREA RESOURCES: S&P Revises Stand-Alone Credit Profile to 'bb'---------------------------------------------------------------Standard & Poor's Ratings Services said it has affirmed its 'A+'foreign and local currency long-term corporate credit and debtratings on Korea-based mining investment and financing companyKorea Resources Corp (KORES). The outlook on the ratings remainsstable. We revised the stand-alone credit profile (SACP) forKORES to 'bb' from 'bb+'.

"We revised the SACP for KORES to 'bb' from 'bb+' because weexpect its financial risk profile to deteriorate owing tocontinued overseas mining investments. In our view, the companyis likely to continue to make significant investments in overseasmineral resources over the next two years and the government isunlikely to inject sufficient capital to cover them. As a result,KORES is highly likely to rely on nongovernment externalfinancing, and its indebtedness is likely to continue to riseduring the period," S&P said.

"Still, we affirm the ratings on KORES, reflecting Standard &Poor's opinion that there is an "extremely high" likelihood thatthe government of the Republic of Korea (local currency rating AA-/Stable/A-1+; foreign currency rating A+/Stable/A-1) would provideKORES with timely and sufficient extraordinary support if KORESwere to suffer financial distress. In accordance with ourcriteria for government-related entities (GREs), we base ourrating approach on our view that KORES plays a "very important"role for and has an "integral" link to the government given thatit serves an essential policy role to secure overseas mineralresources for economic development in Korea and that thegovernment strongly influences its strategy and management," S&Psaid.

"KORES' fair business risk profile reflects its monopoly in thepolicy financing business for overseas and domestic private-sectormineral resources development and the stable profitability itgenerates from this business thanks to its ability to borrow fromgovernment at favorable rates. However, KORES in recent years hasbecome increasingly exposed to overseas mining investment, whichbears higher risks than policy financing. In our view, comparedwith the policy financing business, the overseas mining investmentbusiness carries higher risk related to business cycles,volatility in commodity prices, and competition. Still, we seeheightened risk for its policy financing business lending todomestic mining companies, as recent financial difficulty at TongYang Cement Corporation (not rated), KORES' biggest borrower inthe domestic mining business, indicates," S&P said.

"KORES' aggressive financial risk profile, which we revise downfrom significant, reflects our expectation that the company'sreliance on debt for large capital spending on overseas miningassets will continue and thus its leverage will rise over the nexttwo years. We estimate the company is likely to spend as much asKRW2 trillion on overseas mining investments over the next twoyears, likely further worsening its financial risk profile, in ourview," S&P said.

"The stable outlook reflects our expectation that KORES willcontinue to receive government support because it serves anessential policy role to secure overseas mineral resources foreconomic development in Korea. Although we expect the company'scontinuing investments in overseas resources to increase itsexposure to business cycles in the mineral resources sector, webelieve consistent government support offsets a degree of therisk," S&P said.

"Because KORES' relationship with the government of Korea has moreeffect on the ratings than the SACP, we would raise our ratings onKORES if we raised those on the government and we would lower theratings on KORES if we lowered those on the government. Also, wewould lower our ratings on KORES if the government appeared likelyto privatize the company or reduce support for it," S&P said.

"In addition, we would lower our ratings on KORES if we reviseddown the SACP for the company to ' b+' or lower, possibly as aresult of higher leverage due to bigger-than-expected overseasmining investments or smaller-than-expected injections ofgovernment capital," S&P said.

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